The Complete Guide to NDAs (Non-Disclosure Agreements)

Mutual or one-way: choose deliberately

A one-way (unilateral) NDA protects information flowing in a single direction — typical when you are pitching an investor or hiring a contractor who will see your systems.

A mutual NDA protects both parties and is the correct default whenever both sides will actually share something: partnership talks, joint bids, acquisition discussions, most vendor relationships.

If someone hands you a one-way NDA for a genuinely two-way conversation, asking to make it mutual is a normal and usually uncontroversial request. If they refuse, that itself is information.

Defining confidential information

This is where NDAs are won or lost. Too narrow and the thing you actually care about is not covered. Too broad — "all information disclosed, in any form, whether or not marked confidential" — and it becomes unenforceable in practice because nobody can tell what is protected.

The workable middle is a specific list of categories plus a catch-all, paired with standard exclusions.

• Name the categories: source code, customer lists, pricing, unreleased product plans, financials.
• Exclude information already public, independently developed, or lawfully received from a third party.
• Exclude disclosures compelled by law or court order, with notice to the other party where permitted.
• Decide whether verbal disclosures count, and if so, whether they must be confirmed in writing within a set window.

How long should an NDA last?

Two to five years covers most commercial information. Beyond that, the value of the secret has usually decayed and courts grow sceptical of perpetual restraints.

Trade secrets are the exception: it is normal to say the confidentiality obligation lasts as long as the information remains a trade secret, while everything else expires on a fixed date. Splitting the term that way is cleaner than making everything perpetual.

Also separate the term of the agreement from the term of the obligation. The agreement might run one year, while the duty of confidentiality on information disclosed during that year continues for three.

Clauses to push back on

• Non-solicitation smuggled into an NDA — hiring restrictions belong in their own negotiated clause, not buried in a confidentiality document.
• Non-compete language dressed up as confidentiality. Several states, California most notably, will not enforce it anyway.
• Assignment of intellectual property. An NDA should protect information, not transfer ownership of anything you create.
• One-sided injunctive relief and fee-shifting, where only their legal costs are recoverable.
• Perpetual terms on ordinary business information.

Getting it signed

NDAs are valid electronically under the federal ESIGN Act and state UETA adoptions. A signed PDF with a timestamped audit trail is as enforceable as ink, and considerably easier to find two years later when it matters.

Store the countersigned copy somewhere retrievable, with the effective date and the counterparty name in the filename or record. An NDA you cannot locate is functionally an NDA you never signed.